Focus Compliance Efforts on Six Core Areas

Stop me if you've heard this one. Seems an old football coach was sitting in his office when one of his players walked in and informed him he had been declared academically ineligible. The coach looked at the player and said, "Son, what kind of grades did you get last semester?" The student replied, "Coach, I got four F's and a D+." The coach looked squarely at his player and said, "Son, it sounds to me like you're spending too much time on one subject."

It has become abundantly clear that focusing on one subject is not a luxury afforded the telemarketing industry when it comes to legal compliance. Legislation and regulation of the industry are coming at a dizzying pace. More than 150 bills have been introduced at the state level in 1999. There is no shortage of opinions when it comes to attempts to propose regulatory measures. Bills as innocuous as those that simply repeat the requirements of the TCPA are matched up against proposals that would ban telemarketing.

While the universe of bills spans the spectrum of regulation, legislatures are not that different from the majority of American businesses in that they are loath to reinvent the wheel when a workable model already exists. Thus any effective corporate compliance program can spend the majority of its resources focused on six main regulatory areas:

• Registration and bonding. Currently required in 25 states, these statutes are similar from state to state. Nearly all define telemarketing in a manner that includes outbound calls and inbound calls prompted by some form of advertising generated by the telemarketer. Most states exempt a number of sub-industries, including publicly traded companies, stock brokers, real estate agents, insurance companies and non-profit callers.

If you are not in an exempt business, the state requires you to provide extensive information about your business, including financial information, scripts or other marketing materials. In most of these states, the registration and information must be accompanied by a bond in favor of the state.

Each year a handful of states propose registration and bonding legislation. So far, only Montana has added this requirement to their state statutes this year.

• Calling hour restrictions. The most common restrictions limit telemarketing calls to a period from 9 a.m. to 9 p.m. Some states prohibit calls on Sundays and holidays.

Popular at the legislative level is the concept of carving out a family dinner hour restriction that would try to estimate when the majority of the state's citizens eat dinner and prohibit calls during that period.

No new calling time restrictions have been enacted this year.

• Do-not-call lists. This is 1999's hottest topic. Georgia and Kentucky created state DNC lists last year, bringing the total to five. The publicity and apparent popularity of the Georgia list has led many states to propose similar legislation this year.

The premise of these laws is that a state agency, usually the Attorney General's office or the Public Utility Commission, will maintain a database of state residents who do not wish to receive any telemarketing calls. Consumers can be placed on the list for an annual fee. Telemarketers are required to purchase the list from the agency, either quarterly or annually, and are prohibited from placing calls to residents on the list.

• Ask permission to continue. This is a regulatory scheme that has not caught on in most states. However it is still an important compliance issue in the four states that require it. These laws call for a telemarketer to ask for the consumer's permission before they deliver any type of pitch, message or marketing statement. If the consumer does not give permission, the caller is to hang up without providing additional information.

Similar to the "ask permission" states are states that simply require a telemarketer to immediately discontinue the sales pitch if at anytime during the call the consumer indicates he or she no longer wishes to listen to the telemarketer. This regulation has not been effective and has not seen widespread acceptance.

• Blocking of caller-ID. If the creation of state-run DNC lists is the most popular legislative proposal in 1999, then bills that would prohibit a caller from blocking the display of caller-ID information are a close second.

These bills come in three primary categories: supportable, acceptable, impossible.

The acceptable bills prohibit the telemarketer from using any device or procedure to block caller-ID. This is acceptable because it prohibits only an action by the telemarketer. However, these statutes could be read to include the use of a T-1 line or other equipment that does not transmit caller-ID information.

The impossible bills are just that. They require the telemarketer to make sure a name or a telephone number show up on the consumer's caller-ID. These bills do not take into account that in many cases technology does not exist to transmit such information.

• Written materials. This is one of the most difficult issues confronting telemarketers as they develop compliance programs. Almost every state requires some form of written material be sent to the consumer before a transaction can be completed. Some simply require a notice of cancellation

and other material terms and conditions. Others require the telemarketer to obtain the signature of the consumer on the written materials before a transaction is completed. Absent a signed copy of the materials, the consumer has a right to cancel that transaction and receive a full refund at any time.

The problem with these statutes occurs when the states mandate specific language that must be used in the written materials. While the basic premise of these statutes is the same, usually the states will reinvent the wheel when drafting the language that must be included in such materials. Thus strict compliance will require a number of different written contracts, specific to each state in which the consumer resides.

A number of states break the mold each year and propose unique regulatory initiatives. Yet, the vast majority still fall into one of these six main topics. The industry needs to continue to gather data and additional evidence that will support the argument that most of this regulation is unnecessary. Now that we know the subjects, we can't afford to get caught focusing on just one area of compliance. We need straight as if we are to remain the economic equivalent of academically eligible.

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